Asia Stocks recap: Week starts with a whimper

Reuters

Welcome to the Asia Stocks live blog, a running account of what the region’s share markets are doing, along with other news. Today, Asian equities get off to a lackluster start, beginning the week with a whimper but possibly ending with a bang, given upcoming risk events such as an early read on Chinese manufacturing and, to a lesser extend, a Bank of Japan policy decision.

China’s property prices are showing further signs of a slowdown amid government curbs.

For example, the latest data show Beijing’s prices for second-home purchases falling in April by the most in two years, while newly built residential-housing price gains eased for the sixth straight month.

But with the government taking action, some economists say the problem may get less severe, even if prices continue lower.

Last week, we saw raging gains for India stocks, as investors got excited about the possibility of a strong, Bharatiya Janata Party-led government.

Now that such a government is, in fact, set to take control of the nation, stocks are … rising further!

In early Monday trade, the Sensex is up 0.7% (though off its early highs), with the NSE Nifty up 0.6%.

So how to play? In comments last week, right after the election results, Aberdeen Asset Management’s Adrian Lim said the BJP victory would “fuel expectations of, amongst other things, more aggressive infrastructure investment.”

He specifies a trio of infrastructure firms that might benefit from this, though they’re seeing a mixed response today: Ambuja Cements is down 0.7%, and Ultratech Cement is down 1.2%, though Grasim Industries is up 1%.

Lims’s suggestion to buy “prudently run, shareholder-friendly companies,” such as private banks, is proving more prescient today, however, with his picks HDFC Bank and ING Vysya up 2.2% and 1.8%, respectively.

HSBC plays it a little safer, not offering advice on particular shares, but rather sectors with a strong post-election outlook.

Specifically, they predict “strong rotational shifts towards domestic sectors, such as energy, materials, infrastructure and utilities,” rather than the previous, more defensive favorites of health care and tech.

11:18 pm | Is the China the new Japan (in a bad way)? | by Mike Kitchen

Amid the drumbeat of warnings about China's beleaguered real-estate sector, Craig Stephen looks at the argument that a spike in bad loans from falling property values will lead China to the sort of economy that Japan suffered through in the 1990s.

Some of the possible similarities are discussed in a recent note from Japan's own Nomura brokerage, with the analysts saying China now, like Japan then, might not take the tough line with banks that would be needed to address the issue.

And there are other issues too, ranging from rising interest rates to the hubris of officials and businesspeople.

A selloff in mainland Chinese stocks is dampening the Hong Kong market, dragging the Hang Seng Index lower by 0.6% in early trading. The Hang Seng China Enterprises, which tracks Hong Kong-listed mainland companies, is sliding 1.3%, while over on the mainland itself, the Shanghai Composite Index is carrying a loss of 1%.

Property developers are declining across the board. The top losers in Hong Kong include Beijing North Star (down 3.3%), China Resources Land (down 2.5%), KWG Property (down 2.5%), and Fantasia Holdings (down 2.4%). One of Hong Kong’s leading developers, Sun Hung Kai Properties, is falling 2%, and rival Henderson Land Development is down 1.9%.

In Shanghai, property stocks are also suffering, as Beijing Capital Development gives up 1.9%, Wolong Real Estate Group pulls back 1.5%, and Metro Land Corp. moves down 1.1%.

China Southern Airlines is down 0.4%, outperforming the Hang Seng Index even as it signs a deal to buy 80 passenger aircraft from Europe’s Airbus Group with a combined list price of up to $9.33 billion, in a move to boost capacity. Its rival Air China is losing 2.9%, and China Eastern Airlines is down 1.7%.

China Travel International Investment Hong Kong, a subsidiary of China’s state travel-service giant, is off 3.1% after it said its chairman Wang Shuaiting is under investigation due to his “suspected severe violations” of state laws and party discipline. The charges stem from when Wang worked for China Resources Group, another Hong Kong-based Chinese state conglomerate, which saw its chairman fired last month as part of a recent anti-corruption campaign.

Australian stocks are stumbling into the new week with a 0.7% loss for the ASX 200, as mining shares serve as a weight around the market’s neck this morning.

With spot iron-ore prices falling to just above the $100-a-tonne level, we have BHP Billiton down 1.2%, Rio Tinto and Fortescue Metals down 1.8% each, Atlas Iron down 1.1%, and Mt. Gibson Iron down 0.7%.

Likewise, Oz Minerals is 1.5% lower, even as Credit Suisse says the copper-focused miner will probably soon raise its 2014 production outlook.

The “Big Four” Australian banks aren’t offering any help for the market either, with ANZ down 0.6%. CBA down 0.7%, and Westpac and NAB down 0.8% apiece.

On the plus side of the ledger, Goodman Fielder is up 4.1% after the food firm (bread and butter are its bread and butter, so to speak) said it would back the improved takeover offer from Singapore’s Wilmar and Hong Kong’s First Pacific. (See Friday’s Asia Stocks blog).

After a wild week of gains and losses (mostly losses), Japanese stocks are quiet this morning, with the Nikkei Average flat and the broader Topix down 0.2%.

With the Japanese yen trading little changed from Friday (the dollar's currently buying ¥101.59), the top tech shares are seeing mixed fortunes.

Tokyo Electron is up 6%, tacking on further gains after solid earnings from Taiwan's TSMC raised sentiment for chip stocks, and Japan Display is up 2.3%, rebounding after a heavy Friday selloff on the back of its earnings. But on the other hand, Sony is down 0.6%, Panasonic is 0.9% lower, and Sharp is down 2.6% after its recent gains.

It's also a mostly mixed picture for industrials after an opening advance for the sector, as data out just before the open showed Japan's core machinery orders for March surging more than 19% in March, blowing past analysts' consensus forecast for a 6.2% gain (or so said a Wall Street Journal survey).

Robot maker Fanuc is up 0.1%, and Mitsubishi Heavy Industries is up 0.4%, but Kawasaki Heavy is down 0.5%, and NEC is flat.

Retailers are broadly higher, however, with Fast Retailing up 0.6%, Aeon up 1%, and J. Front Retailing up 1.2%. Auto makers, though, are lower, with Toyota down 0.5%, Honda down 0.2%, and Nissan down 0.3%.

Shares of Sotbank are up 0.7% after the telecom announced it plans to issue ¥300 billion (about $3 billion) in new bonds for funds to spend on future investments and acquisitions.

And while financials are mostly weaker (Mitsubishi UFJ down 1.4%, Dai-Ichi Life down 1.1%), shares of Nomura are up 0.3% as the Nikkei newspaper reports the investment bank plans to set up a joint-venture brokerage in the Shanghai Free-Trade Zone.

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